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Prices, Unit Values and Local Measurement Units in Rural Surveys: an Econometric Approach with an Application to Poverty Measurement in Ethiopia

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  • Bart Capéau
  • Stefan Dercon

Abstract

For many research problems in developing countries, some information on prices faced by households is required, for example if subsistence consumption is a substantial part of consumption. These prices are not readily available from household surveys, and at times they are not easily observed, for example if markets are thin and systematic price information can only be observed from markets some distance away from communities. Furthermore, quantities consumed and produced are often in local units presenting further problems for the analysis. We provide an econometric approach to estimate prices and quantity conversion factors from household expenditure data, using data from rural Ethiopia to illustrate the approach. In an application, we show that the conclusions about poverty changes over time are significantly affected by using alternative strategies to convert local units and to value subsistence consumption. We find in our case that mean unit values result in the overestimation of prices due to outliers and other sources of measurement error. Exogenous consumer price sources, often collected at larger markets outside the village, tend to give slightly lower values than our estimates. Copyright 2006, Oxford University Press.

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Bibliographic Info

Article provided by Centre for the Study of African Economies (CSAE) in its journal Journal of African Economies.

Volume (Year): 15 (2006)
Issue (Month): 2 (June)
Pages: 181-211

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Handle: RePEc:oup:jafrec:v:15:y:2006:i:2:p:181-211

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  1. Ravallion, Martin & Bidani, Benu, 1993. "How robust is a poverty profile?," Policy Research Working Paper Series 1223, The World Bank.
  2. Deaton, A., 1990. "Price Elasticities From Surveys Data: Extensions And Indonesian Results," Papers 69, World Bank - Living Standards Measurement.
  3. Deaton, Angus, 1988. "Quality, Quantity, and Spatial Variation of Price," American Economic Review, American Economic Association, vol. 78(3), pages 418-30, June.
  4. Strauss, John, 1982. "Determinants of food consumption in rural Sierra Leone : Application of the quadratic expenditure system to the consumption-leisure component of a household-firm model," Journal of Development Economics, Elsevier, vol. 11(3), pages 327-353, December.
  5. Christopher B. Barrett, 1996. "Market Analysis Methods: Are Our Enriched Toolkits Well Suited to Enlivened Markets?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(3), pages 825-829.
  6. Glewwe, Paul, 1990. "The measurement of income inequality under inflation : Correction formulae for three inequality measures," Journal of Development Economics, Elsevier, vol. 32(1), pages 43-67, January.
  7. Levin, Carol E., 1991. "Rural Household Data Collection in Developing Countries: Designing Instruments and Methods for Collecting Consumption and Expenditure Data," Working Papers 128151, Cornell University, Department of Applied Economics and Management.
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Cited by:
  1. Vincent Leyaro & Oliver Morrissey & Trudy Owens, 2010. "Food prices, tax reforms and consumer Welfare in Tanzania 1991–2007," International Tax and Public Finance, Springer, vol. 17(4), pages 430-450, August.
  2. Ole Boysen, 2012. "A Food Demand System Estimation for Uganda," The Institute for International Integration Studies Discussion Paper Series iiisdp396, IIIS.
  3. Florence Kondylis, 2007. "Agricultural Outputs and Conflict Displacement: Evidence from a Policy Intervention in Rwanda," HiCN Working Papers 28, Households in Conflict Network.
  4. Ole Boysen, 2009. "Border Price Shocks, Spatial Price Variation, and their Impacts on Poverty in Uganda," The Institute for International Integration Studies Discussion Paper Series iiisdp306, IIIS.
  5. Meng, Xin & Gregory, Robert & Wan, Guanghua, 2006. "China Urban Poverty and its Contributing Factors, 1986-2000," Working Papers RP2006/133, World Institute for Development Economic Research (UNU-WIDER).

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